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    Question

    A machine is purchased for $100,000 and $10,000 is spent

    on its installation. Residual value of the machine is $9,000 and its useful life is 5 years. Calculate the rate of depreciation.
    A 18.36% Correct Answer Incorrect Answer
    B 18.6% Correct Answer Incorrect Answer
    C 18.5% Correct Answer Incorrect Answer
    D 19% Correct Answer Incorrect Answer

    Solution

    Depreciation each year = (Asset cost - salvage value)/useful life = (100,000 +10,000 - 9000)/5  = 20,200 per year Depreciation rate = depreciation/cost =20,200/110,000 =18.36%

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